Answer:
Annual depreciation= $25,375
Explanation:
Giving the following information:
Purchase price= $109,200
Salvage value= $4,200
Useful life in miles= 120,000
To calculate the depreciation expense, we need to use the units-of-activity method:
Annual depreciation= [(original cost - salvage value)/useful life of production in miles]*miles operated
2018:
Annual depreciation= [(109,200 - 4,200) / 120,000]*29,000
Annual depreciation= 0.875*29,000
Annual depreciation= $25,375
